588 A.2d 609
SYNOPSIS: Plaintiff appealed an order from the Superior Court Providence County (Rhode Island) in which the court entered judgment on plaintiff's complaint to dissolve the corporation under R.I. Gen. Laws §§ 7-1.1-90 (Reenactment 1985) discounting plaintiff's shares because of their minority status and lack of marketability.
-Plaintiff minority shareholder brought suit against defendant corporation under R.I. Gen. Laws § 7-1.1-90 (Reenactment 1985) to dissolve defendant corporation.
-Defendant corporation moved under R.I. Gen. Laws § 7-1.1-90.1 to purchase plaintiff's shares.
-The lower court entered a judgment discounting plaintiff's shares.
The supreme court reversed the lower court's judgment, holding that plaintiff's shares should not have been discounted based on its minority status or lack of marketability.
-Minority shareholders should not receive less than fair market value for their shares if, instead of fighting the dissolution action, the majority decides to seek appraisal of minority shares in order to buy out the minority.
-The court further held that a lack of marketability discount was inapposite when a corporation elected to buy out a shareholder that filed for dissolution of a corporation.
In circumstances in which a corporation elects to buy out a shareholder's stock pursuant to R.I. Gen. Laws § 7-1.1-90.1, the court shall not discount the shares solely because of their minority status.
OUTCOME: The supreme court reversed the lower court's judgment, holding that plaintiff was entitled to fair market value of his shares and no discount should have been given to the shares because of their minority status and lack of marketability.
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